Since the disappearance and apparent killing of a dissident journalist in a Saudi Arabian consulate, some of the most powerful figures in business are distancing themselves from the kingdom. There is one prominent exception: Masayoshi Son, chief executive of the SoftBank Group.
Mr. Son, the 61-year-old founder of SoftBank, the Japanese internet, energy and financial conglomerate that owns Sprint, is one of Saudi Arabia’s biggest business partners. His company oversees the SoftBank Vision Fund, a technology investment fund that sought $ 100 billion in investments and received the promise of $ 45 billion from the Saudi sovereign wealth fund.
In the two years since then, the Vision Fund has become the largest private equity fund in the world, with beneficiaries that include Uber, WeWork and Slack — some of the world’s most successful start-ups.
The success or failure of the joint venture has enormous ramifications for both sides. And now, an investment conference that was to be a triumphant display of the kingdom’s economic modernization has instead become a painful referendum on its human-rights record.
As of Wednesday, Mr. Son had not publicly said whether he would attend the conference, known as the Future Investment Initiative, which is scheduled for next week in Riyadh, Saudi Arabia’s capital.
Other executives, including Jamie Dimon of JPMorgan Chase and Dara Khosrowshahi of Uber, have canceled plans to attend amid concerns that Saudi officials played a role in the disappearance of Jamal Khashoggi, a Saudi journalist who entered the kingdom’s consulate in Istanbul on Oct. 2 and never emerged. A Turkish official said Wednesday that Turkey had recordings that indicated that Mr. Khashoggi, who wrote for The Washington Post, was beaten and tortured before being beheaded and dismembered.
American intelligence officials have become increasingly convinced that Saudi Arabia’s de facto ruler, Prince Mohammed bin Salman, was connected in some way to Mr. Khashoggi’s death.
A SoftBank spokesman, who would not allow his name to be used, said that Mr. Son would wait for more information before he made a decision about attending the conference.
SoftBank’s chief operating officer, Marcelo Claure, said on Tuesday that the company was “monitoring” the reports about Mr. Khashoggi’s disappearance.
“At this point in time, we, like most companies that have a relationship with Saudi Arabia, are watching developments and seeing where this goes,” Mr. Claure told a group of reporters at a tech industry event in San Jose, Calif. “There are developments pretty much every hour these days.”
Mr. Son has pointed out to business associates that the SoftBank Vision Fund had a responsibility to the Saudi citizens who had entrusted his company with $ 45 billion from their kingdom’s sovereign wealth fund, according to SoftBank officials who spoke on condition of anonymity because they were not authorized to speak publicly. At the same time, these officials said, he has conveyed to executives at companies in the Vision Fund’s portfolio that they should not feel obligated to follow his lead, and must do what feels right to them.
It is a delicate balance for Mr. Son, who is on the one hand receiving investment capital from a conservative nation that built its vast wealth with oil and on the other hand using that very wealth to fund progressive young companies with different set of values.
Since Turkish officials accused the Saudis of ordering the killing of Mr. Khashoggi, a spate of foreign chief executives including Mr. Dimon, Mr. Khosrowshahi, Stephen Schwarzman of Blackstone Group and Laurence D. Fink of BlackRock has withdrawn from the conference. All their companies have financial interests in the kingdom.
Mr. Dimon’s company has an office in Riyadh with about 70 employees. Mr. Schwarzman’s firm started an infrastructure fund backed by as much as $ 20 billion from Saudi Arabia. Mr. Fink’s company manages billions of dollars for Saudi Arabia’s central bank. And Mr. Khosrowshahi’s company received a $ 3.5 billion investment from the Saudi sovereign wealth fund, known as the Public Investment Fund, in 2016. The managing director of the fund sits on Uber’s board.
But those executives are not as deeply enmeshed with the Saudis as Mr. Son.
Mr. Son is “certainly in an uncomfortable position,” said Colin C. Blaydon, director emeritus of the Center for Private Equity and Entrepreneurship at Dartmouth’s Tuck School of Business. “Everyone is sort of stepping back to wait and see how all of this plays out,” he added, “and the question for the immediate, for someone like Mr. Son, is, will there be a short-term solution around this conference that then gives some breathing room to try and figure out what comes next?”
Some executives have taken more drastic efforts to distance themselves from the Saudis. Richard Branson, the Virgin Group founder, has halted discussions over planned Saudi investments in two Virgin space-tourism businesses. Ariel Emanuel, the chief executive of the entertainment agency Endeavor, is working to extricate his company from a $ 400 million investment it recently received from the Public Investment Fund, a person familiar with the situation had said.
The Saudis’ partnership with the SoftBank Vision Fund in October 2016 was intended as a shining example of the country’s entrance into a cutting-edge economy.
In April of that year, Prince Mohammed, the king’s son and now his heir apparent, unveiled Vision 2030, his blueprint for a more diverse, less oil-dependent kingdom. As part of that plan, he would float shares of Saudi Arabia’s national oil company, Aramco, to the public, and use the proceeds of that deal to subsidize the Public Investment Fund, which had ambitious growth plans. The Aramco initial public offering, which was expected to raise at least $ 100 billion, was delayed in August. However, Prince Mohammed recently said it would happen by 2021.
The Public Investment Fund pledged to invest up to $ 45 billion in the SoftBank Vision Fund over a five-year period. That promise raised the possibility of the Saudis being involved in dozens of promising portfolio companies in areas like artificial intelligence, robotics and ways to link devices over the internet.
After the Saudis committed to the Vision Fund, Apple invested $ 1 billion. So did Oracle’s chief executive, Lawrence Ellison; the manufacturer Foxconn; and the chip maker Qualcomm. During a meeting with president-elect Donald J. Trump shortly before his inauguration, Mr. Son vowed to use Vision Fund capital to invest $ 50 billion in the United States and create 50,000 new jobs, winning favor with the new administration.
“My goal is to become the Warren Buffett of the tech industry,” Mr. Son said shortly after the fund was set up. “We’re aiming to be the Berkshire Hathaway of tech.”
The Vision Fund is structured like a private equity fund: Participants agree to an investment amount upfront, but send the money only as individual deals are signed. SoftBank has spent $ 27 billion of the Vision Fund’s $ 92 billion in capital as of June 30, according to the company. Saudi Arabia’s share of that would be roughly $ 12 billion. The fund has invested billions more in the months since.
But the financial performance of the Vision Fund so far has been promising enough that Mr. Son has been discussing plans to raise a second Vision Fund — a plan that Saudi Arabia has said it heartily supports.
In an interview with Bloomberg News this month, Prince Mohammed said that the Public Investment Fund would commit another $ 45 billion to the next Vision Fund. “Without the P.I.F., there will be no SoftBank vision fund,” he said.
But since Mr. Khashoggi’s disappearance, SoftBank officials have privately contemplated how, in a worst-case scenario, they could distance themselves from Saudi Arabia. One option, according to a person involved in the decision-making, would be to not accept any more of the kingdom’s money.
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